Exactly why strategic alliances are vital to business growth

Exactly why strategic alliances are vital to business growth

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Joint ventures can be beneficial to organisations seeking to expand to new markets and territories. Carry on reading for more information.

Business expansion is an auspicious objective that any entrepreneur thinks about at some point during their career, nevertheless, it can be a really difficult and pricey process. It is for these factors that some businessmen choose joint ventures when attempting to break into brand-new markets and areas. Launching a world-class joint venture such as Telkom Indonesia and Telstra's joint venture can significantly increase the chances of success as partners pool their resources and connections in an attempt to increase performance. For instance, a company wishing to expand its distribution to brand-new markets and territories can gain from partnering get more info with regional players. By doing this, it can benefit from a currently existing regional distribution network, not to mention having access to knowledge and expertise on the target market. Beyond this, regulations in certain jurisdictions restrict access to foreign companies, indicating that a JV contract with a local entity would be the only way to gain access.

For decades, joint ventures in international business have culminated in equally advantageous results, and entities such as Geely and Concordium's recent joint venture is a good example on this. There are lots of reasons companies go into joint ventures but possibly the most crucial of which is to take advantage of resources and gain access to proficiency that one company might be missing. For instance, one company may have excellent marketing and distribution channels however lacks a streamlined production hub. By partnering with a business that has a reputable manufacturing process, both entities benefit considerably. Another reason why JVs are popular is the truth that businesses share expenses and risks when embarking on a joint venture. This makes the collaboration more appealing as both entities would share the expense of labour and advertising, and they both take advantage of lower production costs per unit by leveraging their capabilities and integrating knowledge.

There's a long list of joint ventures that covers various sectors and businesses across the globe, some of which have culminated in the creation of the world's most prosperous businesses. That said, there are different types of joint ventures and picking the best one greatly depends upon the objectives of the entities involved and the nature of their respective organisations. For example, project-based joint ventures are a type of collaboration that brings together 2 entities from different backgrounds to reach a common goal. This could be a JV between a commercial entity and an academic institution or short-term partnership in between a businessman and a government such as Farhad Azima and Ras Al Khaimah's joint venture. Vertical joint ventures are likewise another popular vehicle for growth as these bring together 2 entities that co-exist in the very same supply chain like buyers and vendors, and they provide increased growth chances for both parties involved.

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